Siting it Right: Do States Target Economic Distress When Designating Enterprise Zones?

Abstract

Although economic development incentives have increasingly been targeted to particular geographic areas during recent decades, there has been surprisingly little examination of which areas are actually targeted. This article examines the targeting decisions of 10 states that implemented enterprise zone programs that limited their number of zones. Therefore, in all the states, not all distressed areas received enterprise zone incentives. By examining the relative distress of zone areas prior to designation, this study finds that factors such as population density, local housing market, and demographics help distinguish between distressed areas that received zones and those that did not. In addition, this article suggests that some characteristics of neighboring areas can help predict zone location. By helping to distinguish the types of places likely to be designated as enterprise zones, the article creates a framework for selecting comparison areas for enterprise zone impact evaluation.